MORTGAGE SERVICING RIGHTS

3 Months Ended

Mar. 31, 2015

MORTGAGE SERVICING RIGHTS [Abstract]

NOTE 12 – MORTGAGE SERVICING RIGHTS

Mortgage servicing rights (“MSRs”), which are recognized as a separate asset on the date the corresponding mortgage loan is sold, are recorded at fair value as determined at each accounting period end. An estimate of the fair value of the Company’s MSRs is determined utilizing assumptions about factors such as mortgage interest rates, discount rates, mortgage loan prepayment speeds, market trends and industry demand. Data and assumptions used in the fair value calculation related to MSRs as of the dates indicated were as follows:



	March 31,		December 31,
	2015	2014	2014

	(Dollars in thousands)
Unpaid principal balance	$ 5,705,638	$ 5,568,829	$ 5,686,756
Weighted-average prepayment speed (CPR)	12.4	10.9	11.6
Discount rate (annual percentage)	9.8	10.3	9.8
Weighted-average coupon interest rate (percentage)	4.1	4.2	4.1
Weighted-average remaining maturity (months)	315.0	312.0	314.0
Weighted-average servicing fee (basis points)	26.5	26.6	26.5

Because the valuation is determined by using discounted cash flow models, the primary risk inherent in valuing the MSRs is the impact of fluctuating interest rates on the estimated life of the servicing revenue stream. The use of different estimates or assumptions could also produce different fair values. The Company does not hedge the change in fair value of MSRs and, therefore, the Company is susceptible to significant fluctuations in the fair value of its MSRs in changing interest rate environments.

The Company has only one class of mortgage servicing asset comprised of closed end loans for one-to-four family residences, secured by first liens. The following table presents the activity in this class for the periods indicated:



	2015	2014

	(In thousands)
Fair value as of January 1	$ 51,296	$ 54,662
Additions:
Origination of servicing assets	2,499	1,460
Changes in fair value:
Due to payoffs/paydowns	(1,564)	(1,138)
Due to change in valuation inputs or assumptions
used in the valuation model	(3,039)	(1,547)
Other changes in fair value	(2)	(1)
Fair value as of March 31	$ 49,190	$ 53,436

All of the changes to the fair value of the MSRs are recorded as part of mortgage lending noninterest revenue on the income statement. As part of mortgage lending noninterest revenue, the Company recorded contractual servicing fees of $3.9 million and $3.7 million and late and other ancillary fees of approximately $348,000 and $334,000 for the three months ended March 31, 2015 and 2014, respectively.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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